With the advent of credit cards and lazy payment options, life has become easier. Thrift shopping and impulse purchases, both online and offline, have become a way of life. One could even say that life with credit has become an indispensable way of being.
With increased cashback offers, discounts and deals with credit cards, it is becoming increasingly lucrative to see your bank account in all its glory through the month while your credit cards bare the brunt of your lifestyle. Well, at least till the due date arrives, and then we have the luxury of minimum dues!
On some level, this is a chicken and egg situation – a debt lifestyle, maintained with a high credit score! So, if you have a good credit score, do you need a credit-based lifestyle?
Before we answer the main question, let us address a basic query:
What Is A Credit Score?
Your credit score indicates if any lending partner should find you reliable enough to borrow money and your borrowing limit. This three-digit number helps set borrowing limits, repayment models, and interests applicable (in some cases).
A good credit score can help you with approvals for credit cards, loans, and mortgages. There is no universal credit score; different agencies have different parameters in defining a credit score.
What’s more, many lenders believe that no credit history is also considered poor credit history. While all is La La in the credit hungry land, is it possible to get a credit card without a credit check?
The short answer: no, with a few caveats, of course. Let’s tackle one caveat at a time.
Caveat 1: You Have Never Owned A Credit Card Before
People with no credit score find it difficult to get approval for any form of credit. That is because your credit history is a pre-requisite in every borrowing application process.
Additionally, you only get a credit score if you have at least one active account on your credit report for 6 months at least. Do you see the chicken and egg problem?
There is a special credit card no credit check for precisely those kinds of problems. They are known as secured credit cards.
How Can You Get A Secured Credit Card?
Usually, to get a secured credit card, you must open an FD account with a bank, and make a prediscussed amount worth of deposit. You will be issued a credit card with a credit limit of 50-100 per cent.
Caveat 2: You Can Get A Credit Builder Credit Card
Credit builder credit cards are primarily designed for you to improve your credit score and upgrade!
A credit builder credit card has relatively higher interest rates and low credit limits, but they let you build up your credit score if you maintain regular repayments. These credit cards usually have a standard interest rate from the beginning, along with a few perks.
Caveat 3: You Can Get A Student Credit Card
As the name suggests, if you are a student, you can apply for this credit card. This is specially designed for students with low incomes or no credit history.
You can also have your guardian co-sign the credit with you.
Though this process gives you the luxury of calling yourself a credit card owner, these cards sometimes have high interest rates and fees. Do your research before applying!
Why Would You Not Want A Credit Check Done?
Though a rhetorical question, this can be because of any one of the following reasons:
- You have no credit score.
- You have a poor credit score.
- You have done multiple ‘hard’ checks in a short period of time.
12 Ways to Fix Your Credit Score – Consumer Reports
How Can You Fix A Poor Credit Score?
Owning a credit card demonstrates that you can handle credit with responsibility. Simply put, you must manage credit obligations and pay your dues in time.
To build credit, you need to go out there and get credit. Even though it can be tough, you can start with credit builder credit cards, secured credit cards, or even retail credit cards. You can also try to become an authorized user by referrals.
These steps enable you to course-correct:
Start By Paying Your Dues On Time
This helps build credibility and shows your diligence. You can also make this an automated process, so your carelessness does not attribute to missed payments or late fees.
Sometimes borrowers make minimum payments month on month and keep accumulating high interests. Even though making minimum payments doesn’t drastically hurt your credit score (unless it is more than 30% of your limit), it keeps you in debt longer.
Manage Your Credit Card Limits
The best and most elaborate way to manage your credit card is to know your limits. If you can only repay a certain amount each month, then don’t borrow more than that amount. This shows the crediting authorities that you are a responsible borrower and you understand your borrowing limits.
Monitor And Be Aware Of Your Co-signers’ Joint Accounts
This directly impacts your credit score and links their credit history with yours.
Be Careful Of Any Loan Accounts Where You Are A ‘Guarantor’
The repayment of these loans directly affects your credit score. As a guarantor, you become accountable for the borrowers’ defaults. You will rarely find loans with no credit check, and in said cases, the interests and fees are relatively higher than otherwise.
Your credit score is THE main factor in determining whether you get approvals for multiple credit offerings. If you are a salaried employee at a big corporate or you have referrals, you can work around these restrictions. However, bad credit can reduce your chances of getting vital debt offers like mortgages, credit cards, or even business loans.
But it is never too late! With a wide range of niche credit cards designed to improve your credit records, opportunities for instant cash loans, and membership programs, your SIP payments and a matrix of multiple variables enable you to climb back up on the credit scoreboard!
Expect lower opening credit limits and higher interest rates in the beginning. Over the course of time, you will see leniency in your eligibility criteria within a year if done with diligence!